Study identifies attributes of best-in-class procurement organizations

A global procurement study conducted by the consulting firm A.T. Kearney found that top companies manage risk by using risk-impact analysis, financial risk management, and disaster planning to protect against unforeseen threats. Leading procurement organizations, Kearney said, "excel at risk management by anticipating, tracking, and planning mitigation strategies" covering a wide range of threats.

For the study, part of its latest Assessment of Excellence in Procurement report, the consulting firm gathered input from 185 companies across 32 different industries. Eighty percent of the respondent companies said they were vulnerable to a major supply disruption.

As part of the study analysis, Kearney identified 13 of the responding companies that consistently demonstrated a high level of procurement performance. These best-in-class companies had seven practices in common. Besides excelling at risk management, leading companies aligned procurement strategy with the overall goals of the company. They also worked closely with their suppliers to improve new-product development performance, reduced time-to-market for new products, and created new business opportunities to boost revenues. Other leading practices included supplier relationship management processes, tailoring category strategies to particular situations, and "more forward-looking" approaches to recruiting and retaining supply chain talent. They also tended to be more advanced in their adoption of technology.

One other interesting finding was that more than 50 percent of respondents plan to increase their sourcing of products and services from China, India, and other Asian countries over the next three years. Although the study did not specifically ask respondents for an explanation, study author Alejandro Ferrer said his belief was that companies were still expecting a "significant cost differential" if they used other sourcing locations than those Asian regions.